MALAYSIAN conglomerate Sime Darby said that it is buying a majority stake in industrial group UMW Holdings for RM3.57 billion (S$1.04 million), in a deal that could spearhead the country’s electric-vehicle (EV) journey.

The 61.2 per cent stake in UMW is being sold by the country’s top asset manager Permodalan Nasional Bhd (PNB), the biggest shareholder in both Sime Darby and UMW.

The Thursday announcement comes after Reuters first reported earlier in the day that state-owned PNB was considering merging Sime Darby Motors and Perusahaan Otomobil Kedua (Perodua), a unit of UMW, to create a local auto giant worth over RM10 billion.

In the first step, PNB plans to merge the two holding firms, Sime Darby and UMW, and then create the bigger automotive group, Reuters reported, citing sources.

PNB, which manages more than RM300 billion in assets, owns almost half of Sime Darby, and has a direct 10 per cent stake in Perodua, the country’s biggest carmaker by market share. UMW owns 38 per cent of Perodua.

“The consolidation of two leaders in the automotive industry is driven by the opportunities to strengthen our local and regional presence in the automotive sector, while providing a boost to the electrification agenda,” PNB said in a statement.

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Sime Darby said that it will make an offer for the remaining 38.8 per cent stake in UMW, with the aim of delisting UMW from the stock exchange once the agreement with PNB becomes unconditional.

Shares of both Sime Darby and UMW were suspended after the midday break following the Reuters report and the announcement.

EV race

The plan comes amid a push by the Malaysian government to develop the country’s EV sector as competition heats up in South-east Asia to become the main player or a hub in the global production and supply chain of EVs.

Elsewhere in South-east Asia, Vietnam has EV maker VinFast, while Indonesia has nickel producers such as Merdeka Battery and Trimegah Bangun supplying the key battery metal in the global EV supply chain.

Sime Darby Motor has been pushing for the adoption of EVs in Malaysia. The Selangor-based company has plans to build EV charging stations along highways across Peninsular Malaysia, and has been selling China’s BYD EVs in the country.

Perodua is also eyeing breaking into the EV market and embarked last year on a study to build its first hybrid vehicle.

Other shareholders in Perodua include Daihatsu, MBM Resources and Mitsui & Co, the company’s website said.

Shares of Sime Darby rose 0.5 per cent before the trading halt, while UMW shares were 1.5 per cent higher. MBM ended 10.3 per cent higher on Thursday. REUTERS